weak housing markets have historically led the economy into recession.
IF ANY ONE HAS ANY ARTICLES related to housing markets and recessions please post. I will look also.

It looks like we are going to sustain huge foreclosures and credit crunch. That has got to hit consumer spending very hard. If you are teetering on losing a home you cut spending elsewhere to try and make those mortgage payments. Less home sales mean less purchases for furniture, appliances, audio equipment, kitchen ware etc. I don't think the US economy has become recession proof and in the next 12-18 months we will see the impact of the foreclosures impact economic numbers. I'd be surprised if the economy can ride this out and miss a recession. Who knows for sure...time will tell.

weak housing markets have historically led the economy into recession.
IF ANY ONE HAS ANY ARTICLES related to housing markets and recessions please post. I will look also.

It looks like we are going to sustain huge foreclosures and credit crunch. That has got to hit consumer spending very hard. If you are teetering on losing a home you cut spending elsewhere to try and make those mortgage payments. Less home sales mean less purchases for furniture, appliances, audio equipment, kitchen ware etc. I don't think the US economy has become recession proof and in the next 12-18 months we will see the impact of the foreclosures impact economic numbers. I'd be surprised if the economy can ride this out and miss a recession. Who knows for sure...time will tell.

More...

Wishful thinking.

The US economy will do fine. Housing has been in decline since 2004 and the market and earnings have continued to increase. Consumer spending continues to grow. There won't be a recession.

Housing downturn may spell recession
Instability in housing markets has begun to have a negative impact on other sectors of the economy, a potentially bad omen.
By The Denver Post Editorial Board
Article Last Updated: 08/22/2007 09:35:08 PM MDT

The deep downturn in national housing markets would seem to portend bad news for Colorado, which has led the nation in risky mortgage schemes.

But Colorado appears to be weathering the storm better than expected. The state's foreclosure rate is improving after leading the nation in foreclosure filings per household last year. And even with housing-related jobs disappearing, the unemployment rate is pretty low at under 4 percent.

That's cold comfort for Coloradans having problems selling their homes or defaulting on mortgages because of risky lending practices, but it could mean the state will be better positioned to navigate the choppy waters that could lie ahead.

Still, consumers and lenders need to proceed with caution.

The housing instability has begun to have a negative impact on other sectors of the economy, leading some economists to predict that the nation is headed for a recession. We've seen the fallout from the housing turmoil all around us - in the stock market and with mortgage companies going broke and jobs being lost, including some in Colorado.

Perhaps worse, consumers are curtailing spending. In recent years, our homes became more than our prime investments, but also ATMs, as people borrowed against the rising values of their homes for spending money. There are those who can afford their mortgages but are being more cautious with spending, but there are also those who simply can't keep up. The bills have finally come due and those risky mortgage schemes have come home to roost. (About 43 percent of all loans a few years ago were interest-only, double the national numbers.)

Since consumer spending makes up 70 percent of economic activity, a severe spending slowdown could seriously impact the economy, said regional economist Tucker Hart Adams. "There's the inability to spend and the unwillingness to spend," Adams said.

Risky loans in the subprime market have been largely to blame for the current housing problems. And lenders as well as consumers are now paying the price.

The subprime market has enabled first-time homebuyers and low-income people to live in their own homes, which has been a mostly positive thing. In fact, rising home values - and more people getting into homes - helped to prop up the economy after Sept. 11 and enabled many Americans to increase their net worth (on paper, anyway) as they raised cash by borrowing against the rising value of their homes.

But Adams, who predicted the current housing problems more than a year ago, now believes the national economy is headed for a recession.

Gary Horvath, managing director of the business research division of the Leeds School of Business in Boulder, disagrees.

Horvath believes there are enough positive economic signs to suggest otherwise, even though he acknowledges that the turmoil in the subprime lending market had a far stronger impact than many economists forecast. He expects the housing industry to return to normal by the middle of next year.

Horvath said the housing slump in Colorado is isolated to some areas as opposed to being statewide. "It's not wiping out entire towns. It's spotty and that's a positive sign," he said. Also, Colorado was hit with foreclosures before the rest of the country and is coming out of that disaster sooner, he said.

While the financial sector remains flat, about 45,000 jobs were created this year, said Horvath. The stock market is strong. The Federal Reserve is expected to cut the federal funds rate to help avoid a recession.

In the meantime, lenders need to tighten their lending practices - a little government regulation couldn't hurt - and consumers need to do their homework and not fall for one of the many housing schemes that will get them in over their heads.

As home prices fall, people are finding they owe more than their homes are worth. That's a bad sign for an economy that relies so much on a housing bubble.

from 2002 to 2004, interest rates declined. from 2002 to 2005, housing prices increased. throughout those years, real wages didn't climb and savings were negative, so where did people come up with the money to buy plasmas, cars & vacations? answer: cash-out refies and helocs. now housing prices are declining and mortgage rates are increasing, so those options are no longer viable.

there have been tens of thousands of layoffs in the lending and construction sectors. thousands more mortgage brokers, real estate agents, appraisers, property inspectors, etc., are unemployed or at best, underemployed. i know someone who works at a real estate company and she said the office is dead quiet. there is no activity. her hours were cut in half and may be cut again.

the question isn't whether there will be a recession, it will be how serious and for how long.

listen,every bubble brings about a recession. its a simple fact that cannot be ignored. the housing boom lasted due to very loose credit standards based on low interest rates and the rooster has come home to roost. it was basically all smoke and mirrors when you factor in wages not go up with home prices are even coming close for that matter. someone responded by saying those on the verge of losing a home but not actually losing it will cut back on spending,not to mention those that will lose their homes. this retrenchment will cause a recession.it is almost impossible to avoid. the market moves in cycles just as a regular business does.